McCormick raises $2.5 billion; Procter & Gamble sells $2 billion notes; credit spreads ease

By Cristal Cody

Tupelo, Miss., Aug. 9 – Two high-grade issuers tapped the primary market on Wednesday with $4.5 billion of bonds.

McCormick & Co., Inc. priced $2.5 billion of senior notes (Baa2/BBB/) in four tranches to help finance its $4.2 billion acquisition of the condiments division of Reckitt Benckiser LLC.

Procter & Gamble Co. sold a $2 billion offering of senior notes.

Investment-grade issuers have priced nearly $39 billion of bonds in the first three sessions of the week. Market sources expected about $35 billion of supply over the week.

In the secondary market, Procter & Gamble’s 2.7% notes due Feb. 2, 2026 were flat on the day at 43 basis points bid after softening 2 bps on Tuesday, a source said.

Procter & Gamble sold $600 million of the notes on Jan. 28, 2016 at a spread of Treasuries plus 75 bps.

The Markit CDX North American Investment Grade index closed about 1 bp softer at a spread of 60 bps.

McCormick & Co. prices

McCormick & Co. sold $750 million of 2.7% five-year notes at a spread of Treasuries plus 90 bps in the offering on Wednesday, according to a market source.

McCormick priced $700 million of 3.15% seven-year notes with a 110 bps over Treasuries spread.

The $750 million offering of 3.4% 10-year notes were sold with a Treasuries plus 120 bps spread.

McCormick also priced $300 million of 4.2% 30-year notes at a spread of Treasuries plus 140 bps.

The notes all priced on the tightest side of guidance.

BofA Merrill Lynch, Credit Suisse Securities (USA) LLC, Wells Fargo Securities LLC, SunTrust Robinson Humphrey Inc. and U.S. Bancorp Investments Inc. were the bookrunners for the five-, 10- and 30-year notes.

BofA Merrill Lynch, SunTrust Robinson Humphrey, Wells Fargo, Credit Suisse and U.S. Bancorp Investments were the bookrunners for the seven-year notes.

The notes may be redeemed before April 18, 2018 at 101 plus interest if the company’s planned acquisition of the condiments division of Reckitt Benckiser does not close.

Proceeds from the offering will be used to help finance the company’s acquisition with any remaining proceeds to be used for general corporate purposes.

McCormick is a spice company based in Sparks, Md.

Procter & Gamble sells notes

Procter & Gamble priced $2 billion of senior notes (Aa3/AA-/) in two tranches on Wednesday, according to a market source and an FWP filing with the Securities and Exchange Commission.

The company sold $1.25 billion of 2.15% five-year notes at 99.854 to yield 2.181%. The notes priced with a spread of 38 bps over Treasuries, on the tight side of talk in the Treasuries plus 40 bps area.

Procter & Gamble priced $750 million of 2.85% 10-year notes at 99.793 to yield 2.874%, or a spread of 63 bps over Treasuries. The notes were talked to price in the Treasuries plus 65 bps area.

Citigroup Global Markets Inc., Goldman Sachs & Co. and J.P. Morgan Securities LLC were the bookrunners.

Proceeds will be used for general corporate purposes.

The consumer products company is based in Cincinnati.

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